Usually done at the category level, if necessary, you can drill down to sub-levels even down to SKU level

OTB Formula:

Desired End of Month (EOM) inventory

Plus sales and markdowns

Minus Beginning of the Month (BOM) inventory and on order and receipts

Equals Open To Buy

Example:

The component that makes the open to buy calculations difficult is the fact that the end of month and markdown values are based on forecast. A good forecast requires excellent knowledge of the customer, market, store, competition and of course the product.

Benefits of Open - To - Buy:

Estimate in advance capital required for inventory

Ensure right inventory levels for planned sales

Control merchandise commitments

Establish objectives so that actuals can be compared with

Provide opportunity for more profit

This webinar will show you the best ways to achieve proper inventory planning.